Howdy folks. I just want everyone to know that I had a very long nap from the
blog, but I was not, not writing. Shit I have probably been writing on the
order of 5000 words a day, only it has been all political and meant for Detroit/Michigan
consumption. Though I suspect by the time all is said and done the
ramifications will affect millions of people who worked for the government at
any level. Such are the stakes in Detroit’s bankruptcy.

Though the process started about a year ago, the trial of “America’s largest
municipal bankruptcy” does not start until 8/11/14 unless of course there are
no more delays. As well as a marginal poet I am a highly political animal,
especially in areas regarding equal and civil rights, and lately the shrinking
middle class through the transfer of wealth from the middle to the upper
classes of 10% wealthy and big corporations receiving federal dollars to keep
wars going and the 90% of Americans of every kind losing ground to pay them.

About a decade or so ago our Democratic Governor, Jennifer Granholm signed a
law PA 4 that said any financially failing school district could have an
Emergency Financial manager relieve the local school board of all power financial
and simply took over the role of elected officials, who with no money to spend
actually had nothing to do or say. The governor installs the EFM. In every case
though powerless the boards remained in place and got paid and their medical
benefits and other perks.

Well of course the first EFM was installed into the Detroit district which was
about $500,000,000 in the hole. The guy came in cleaned house, found some
thieves, closed about 100 schools and began the rush to for profit elementary
and secondary schools. Then he left with his $2,000,000 salary and now we are
on our fourth EFM for the school board and the debt is just under $200,000,000
now after 8 years of emergency management.

So the new governor, Rick Snyder, a former investment banker and the sole
murderer of Gateway computers (sold the proprietary information to China (ACER
PC). a republican decided that if he had the power to install and EFM in place
of a school board he also had the power to install one over financially troubled
municipalities. The law he used was PA 4. An amended version of the school EFM
law. His test case was a small predominantly black community named Benton Harbor.
BH had a $10,000,000 underfunded municipal pension and a pretty meaningless tax
base since Whirlpool Corporation quit town. BUT they did have a beautiful waterfront
park that had been deeded to the city’s children in perpetuity. Across the St Joseph
River from BH is the town of St. Joseph which wanted that land along the river
for high rise development for gentrification of BH.

Well long story short the park was sold, about 1/3 of the debt was retired and
BH still has an EFM.

But a curious thing was happening, it seemed as if Snyder’s financial assessment
team was able to find that ever city or town of color in Michigan was in poor
financial shape and he appointed and EFM to run them. EXCEPT in Detroit, he
wasn’t ready to take on the whale yet. He tried negotiating and deadline
setting and press pissing, you know politics.

But the citizens of MI kind of thought that the whole concept of an appointed
person was a usurpation of peoples votes. So lo and behold 300,000 valid
signatures were gathered to put the whole EFM thing up for a binding referendum
of the citizens and guess what? PA4 was blown off the books by a large
majority. GREAT! Hey governor go fuck yourself and your EFM’s.

No one counted on the term limited lame duck legislature, which had been
gridlocked even with a GOP majority to in their last 2 weeks of office to write
a new EFM bill, not even bother to take it through committee or debate and send
it and 235 other bills to the governor for his signature. In a 2 week period MI
went completely red, became a Right To Work state, and had a new EM (minus the
F) bill. The EM bill PA 436 gave the governor the right after an assessment to
impose an Emergency manager, who not only controlled the money but EVERY aspect
of governance. From trash pick up to Police and Fire and everything in between
all in the hands of 1 man and whomever he appointed to assist him.

Well then the negotiations with Detroit pretty much stopped
and out new king is named Kevyn Orr, formerly of the Jones Day law firm. Both
of which stewarded Chrysler through their corporate bankruptcy.

So within 1 month of being appointed the new EM Orr was instructed by Snyder to
take us into bankruptcy, rather than look at assets or other ways out of
$18,000,000,000 of municipal debt. 2/3 was held by both secured and unsecured
bondholders who had purchase Detroit bonds that were rated –bbb (junk). And the
other 1/3 was money owed to Detroit’s 2 pension funds, general Retirement
system employees and Police and Fire fighters.

I am going to skip over the bondholders because with the exception of the
insurance companies that took high premiums to insure those bad bets on bonds
most bond holders have agreed to a settlement. Of course the Insurance companies
want more than they are being offered but they are not my problem (yet).

One odd thing was that before going into Bankruptcy (BK) Snyder was able to
wrest control of Belle Isle away from the city, a 900 acre park sitting right
in the river, and make it a state park. That becomes germane later.

Orr had to file a Plan of Adjustment (PoA) with the court detailing settlements
with city creditors, with Citibank and Bank of America his first offer was
dollar for dollar while cutting pensions to 0.10 on the dollar. The BK judge
told him to try again. So now we have the 4th PoA which apparently
is the final one and the one going to trial in Aug.

The two banks settled in the 3rd PoA which left the 23,000 retired
and 7,000 active employees as the largest class of creditors to deal with and
we got dealt #4. Together both pension funds have almost $2.500, 000,000 in
them. PFRS (police and fire) has $938,000,000 and is 80% funded and GRS (the
rest of us) has $1,300,000,000 in it which makes it 73% funded.

So the deals that people are voting on are Police and Fire have no reduction in
pension and 1% loss of Cost of Living Adjustment. Not a bad deal over all at
least they are not stagnant but they do not pay into SS or Medicare, unless
they work another job either while on the force or after they do their 25 years
to make them retirement eligible.

Now plan A is GRS loses 4.5% of actual money, all medical care and a lifetime
repayment of an annuity overpayment that was paid for three years. That
repayment in my case is $2200, which they will not allow me to repay back in a
lump sum but they will deduct $21 per month for the life of my pension, if I predecease
my wife she continues to pay that $21 because for someone else mistake we have
to pay interest on the money we received. Life time interest. Hmm go figure. So
GRS employees are going to right off the top take an up to 20% cut on pensions
(mine is about 12.5%) but my pension is smaller than average so my $940 per
month is reduced to $815.

Now that is the good deal, the best it’s going to get, the one all the
newspapers say is the one we NEED to vote for.

If we vote no we get plan B a 27% cut off the top plus the annuity payback and
still no medical ins, reducing my pension to $630 per month.

So here is the kicker The state, ($198 million), Philanthropic organizations ($350
million) and the Detroit Institute of Art ($100 million) have said they will
throw this money into the GRS if we approve the DIA and all of the art being
transferred from city ownership into a nonprofit held organization untouchable
forevermore from a loss of assets. Known as the Grand Bargain.

Now plan A sounds pretty good, I would swallow that IF that was the end of it
but it is not and the conditions only apply to the GRS fund.

If the $650 million above does not grow through investment to $850 million in 7
years GRS pensions are reduced accordingly.

If the smoothing rate (or average investment rate of return) into the GRS does
not equal 6.7% over the next 7 years GRS employees pensions are reduced
further.

If the Water department does not or is not able to contribute $47 million every
year into the GRS to absolve the city of its debt over 20 years to the pension
fund, the GRS pensions are cut even more.

If the city fails to balance its budget in any year of the next 20 the GRS
pension fund is liable for the shortfall and pensions are reduced further.

So Snyder by first taking Belle Isle off the table he took what could have been
sold for development for about $2 billion and by crafting this Grand Bargain he
is saving the Detroit Institute of Art. The odd thing is in Chap 9 municipal BK
no assets can be forced by the court to be sold, so after reading 711 pages of
a legal document PoA #4 I have come to the conclusion that the two targets of
this BK are 1) drain the GRS pension fund by over the course of years
transferring it into the city’s general fund and 2) set a legal precedent that
Snyder or some future governor can use against ever public employee pension
fund in the state including the state of Michigan’s fund which is 40%
underfunded. And worse yet seeing as this is a FEDERAL bankruptcy any decision
here can and most likely will affect every public employee with a defined
pension in the entire country.

One last thing our state constitution says in part that all public employee
pensions area contractual obligation with the issuer and shall not be impaired
or diminished…11 states have that same guardian written into their
constitution, but the federal judge has already ruled that contracts in Ch 9 BK
can be changed. That is on appeal at the 6th circuit. Which is slow
walking the decision that says of federal rights trump states rights.

So if you have read this far you can see what I have been doing most of my
writing on voicing my concerns and then my decision to vote NO on plan A. I may
lose much more but I am not responsible for the city’s 18 billion dollar debt.
The majority of it came from the abandonment of the city by industry and
mismanagement by the government that employed me. Plan B may still rob the GRS
fund but I do not see how in the document but if A gets approved we also give
up all rights to the courts for redress for the rest of our lives. All of my postings
are on my FB page under my own name.

So given what I have said if you have read this far—how would you vote?

Fellow Citizens of the Earth

Copyright 2006-2017

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About Me

If you want an answer there has to be a question first. Ergo if there is no question then there is no answer.
Find your stride and balance and you will find that the bars you set just beyond your grasp come within reach as you grow.